Invoicing Currency, Firm Size, and Hedging
AbstractWe use the results of a survey conducted on a sample of 3,013 exporting firms located in 5 EMU countries to explore the link between the invoicing currency of exports, firm size, and hedging. About 90% of firms in the sample invoice exports in their (producer) currency. Large firms are more likely to use another currency. The aggregate use of the euro is thus 15 percentage points lower when firms are weighted by their size than for the average firm. This heterogeneity is robust to controlling for determinants of the invoicing choice stressed by the literature. We however show that large firms and firms pricing in another currency as the euro are also more likely to hedge against exchange rate risk. An IV estimation shows the causal impact of access to hedging on the choice of the invoicing currency. We find (large) firms having access to hedging being more likely to invoice in the importer’s currency.
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Bibliographic InfoPaper provided by CEPII research center in its series Working Papers with number 2012-28.
Date of creation: Oct 2012
Date of revision:
Invoicing currency; Financial hedging; Firm-level data;
Find related papers by JEL classification:
- F31 - International Economics - - International Finance - - - Foreign Exchange
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
- G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-11-17 (All new papers)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Nicolas Berman & Philippe Martin & Thierry Mayer, 2012. "How do Different Exporters React to Exchange Rate Changes?," The Quarterly Journal of Economics, Oxford University Press, vol. 127(1), pages 437-492.
- Mary Amiti & Oleg Itskhoki & Jozef Konings, 2012.
"Importers, Exporters, and Exchange Rate Disconnect,"
NBER Working Papers
18615, National Bureau of Economic Research, Inc.
- Amiti, M. & Itskhoki, O. & Konings, Joep, 2012. "Importers, exporters and exchange rate disconnect," Open Access publications from Katholieke Universiteit Leuven urn:hdl:123456789/410768, Katholieke Universiteit Leuven.
- Amiti, Mary & Itskhoki, Oleg & Konings, Jozef, 2012. "Importers, Exporters, and Exchange Rate Disconnect," CEPR Discussion Papers 9260, C.E.P.R. Discussion Papers.
- Mary Amiti & Oleg Itskhoki & Jozef Konings, 2012. "Importers, exporters, and exchange rate disconnect," Working Paper Research 238, National Bank of Belgium.
- Mary Amiti & Oleg Itskhoki & Jozef Konings, 2012. "Importers, exporters, and exchange rate disconnect," Staff Reports 586, Federal Reserve Bank of New York.
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